What Is A Trust?

The Restatement (Second) of Trusts (1959) (hereafter "Restatement") § 2 definition defines a trust generally as;

a fiduciary relationship with respect to property, subjecting the person

by whom the title to the property is held to equitable duties to deal with

the property for the benefit of another person, which arises as a result

of a manifestation of an intention to create it.

So a trust is an arrangement created either by will or inter vivos declaration whereby trustees take title to property for the purpose of protecting and conserving it for the beneficiaries under the ordinary rules applied in chancery or probate courts . . . . Generally speaking, an arrangement

will be treated as a trust if it can be

shown that the purpose of the arrangement is to vest in trustees responsibility for the protection and conservation of property for

beneficiaries who cannot share in the discharge of this responsibility

and, therefore, are not associates in a joint enterprise for the conduct of

business for profit. Definitions emphasize a relationship among several parties.

Who are the parties?

Trusts are defined in terms of parties (grantor, trustee, beneficiary) and

relationships pertaining to the trust property.

Can a trust exist without assets?

Assets required By definition, a trust is a legal relationship with regard to property. Thus, the common-law rule is that a trust does not exist without a res. Am. Jur. 2d

"Trusts" § 47.

The res may be of nominal value (e.g., $1).

A charitable trust may be created by a transfer (inter vivos or by will) by

the owner (or a person with a power of appointment) of property to another

person to hold the property upon a charitable trust. Restatement § 349.

Alternatively, the owner may simply declare that he holds his property upon a charitable trust--no transfer of title is necessary. Id.

A promise to transfer property to the trustee does not create a trust unless

the promise is enforceable as a contract. Id.

A trust that lists no assets in its Form 1023 balance sheet should be required to cite the proper State law that it nonetheless exists as a valid trust under State law.

Can a trust exist without a trustee?

Trustees may die, resign, become incompetent, or be removed as trustee by the court for cause (e.g., mismanagement). See Am. Jur. 2d "Trusts" § 254.

If a trust loses its trustees, the court will appoint others--a trust will not fail for

lack of a trustee, unless the settlor manifests a contrary intent. Restatement §

388, 397.

Similarly, if a transfer of property to trust is ineffective only because no trustee is named in the instrument of conveyance or the trustee is dead or incapable of taking title, a charitable trust is created. Restatement § 353(2).

If a trust loses all of its trustees during the application process, the

determination specialist should ordinarily wait until the new trustees are

appointed before recognizing exemption, to ensure that the trust will in fact

continue. Also, as discussed below, the number and identity of the trustees

could be a material factor in determining whether the trust serves a private

interest.